AP's Kravitz the Creative Morphs Increase in Housing Starts Into 'New Home Construction'

The Associated Press's Derek Kravitz seems to have a difficult time quoting government statistics without rewording them. This is a far from harmless habit.

Tuesday, Kravitz the Creative reported on the Census Bureau's information release on March homebuilding industry activity. His first two paragraphs and the story's headline (y'know, the parts that are more likely to be read over the airwaves or seen by readers in a hurry) told us that "new-home construction" increased by 7.2%. Either the poor chap believes that "housing starts," which is the only number which increased to that degree, is a synonym for "new-home construction," or he was trying to put a prettier face than deserved on a set of depressed industry data that barely showed a pulse.

After two cheery paragraphs, Kravitz segued into communicating the truly pessimistic nature of the housing industry these days, and noted two pieces of information which virtually prove that "new-home construction" did not increase by the percentage stated -- if it increased at all.

Here are several paragraphs from the AP report (bolded paragraph is where the two contradictory data points are found):

New-home construction increases 7.2 pct. in March

Builders broke ground on more new homes last month, giving the weak housing market a slight boost at the start of the spring buying season.

Home construction rose 7.2 percent in March from February to a seasonally adjusted 549,000 units, the Commerce Department said Tuesday. Building permits, an indicator of future construction, rose 11.2 percent after hitting a five-decade low in February.

Still, the building pace is far below the 1.2 million units a year that economists consider healthy. And March's improvement came after construction fell in February to its second-lowest level on records dating back more than a half-century.

... A sign of the battered industry is the number of new homes finished and ready to sell dropped in March to a seasonally adjusted 509,000 units, the lowest level on records dating back to 1968. And the number of homes now under construction has fallen to a four-decade low.

"Housing starts remain at an extraordinarily depressed level," said Dan Greenhaus, chief economic strategist at Miller Tabak + Co. "To put this in further perspective, a doubling of (new homes) from here would still put starts at the lowest level of any other recession." During previous housing recessions, in the early 1980s and 90s, new home construction fell to more than 1 million homes per year. This year's pace is slightly more than half those levels.

And the lack of any meaningful rebound in housing is stunting the broader economic recovery. In past modern-day recessions, housing accounted for 15 to 20 percent of overall economic growth. In the first post-recession year, between 2009 and 2010, housing only contributed 4 percent to economic growth.

Since the mid-part of last year, home construction and sales have instead detracted from the economy.

So, is it conceivable that Kravitz might be lucky and "new-home construction" activity really did increase in a single month by a seasonally adjusted 7.2%? Almost definitely not, and Kravitz himself told us why.

First, as the AP reporter told us, the seasonally adjusted number of units under construction in March, at 423,000, was actually 1,000 units fewer than February's 424,000, and a 40-years-of-recordkeeping low. It's highly doubtful (I'm being polite; the correct term is "virtually impossible") that builders were somehow able to put an average of 7% more work into each of the units under construction in March than they did in February.

Second, Kravitz himself also noted that the number of finished homes available for sale came in at an all-time recordkeeping low. So it's not as if a lot of units came out of the "under construction" category and moved into being ready for sale.

Indirect proof that seasonally adjusted construction activity couldn't possibly have increased by over 7% is found in data at the Bureau of Labor Statistics, which tells us that only 600 seasonally adjusted jobs were added in residential construction in March, bringing the total to 566,500. That's an increase of 0.11% in the seasonally adjusted workforce. For builders to have increased "new-home construction" by the level represented in the AP's headline and Kravitz's second paragraph, everyone in the industry would have had to have been 7% more productive in March than they were in February. Sure, Derek.

Last month (as seen here at NewsBusters; at BizzyBlog), Kravitz reported on existing-home sales without ever referring to, well, existing-home sales, even though the related reports coming the National Association of Realtors have titles containing the words (surprise) "existing-home sales." Kravitz the Creative instead continually referred to "previously occupied homes," which could have given some readers the impression that the numbers did not include homes which had been vacant for an extended time.

Here's a suggestion, Derek: Use the words actually contained the reports, and try to inform your readers instead of misdirecting them. If you want to be creative, take up painting.

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